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Über dieses Buch

Electronic commerce, supply chain management, customer relationship management, and other forms of Business Networking will fundamentally change the way business will be conducted in the information age. We will see close collaboration between processes of different enterprises, and above all, new enterprises and new processes. Business Networking offers exceptional opportunities for innovators and harbors fundamental risks for slowpokes. This book proposes a process-oriented model for Business Networking and the concept of networkability to develop realistic strategies for managing enterprise relationships in the Internet economy. It formulates key success factors and management guidelines which were developed in close cooperation between research and practice.




1. Introduction

Business is in search for the rules of the new economy [cf. Kelly 1998], also referred to as digital economy (cf. [Negroponte 1995], [Tapscott 1995]), networked economy [cf. Shaprio/Varian 1999], information economy [cf. Varian 1994], Internet economy [cf. Zerdick et al. 1999] or information age [cf. Lane 1998]. Information and communication technology (IT)1 enables and shapes the new economy the same way as steam, gas, and electricity have changed the agricultural economy into the industrial economy a hundred years ago.
Rainer Alt, Elgar Fleisch, Hubert Österle

Building the Foundation


2. Enterprise in the Information Age

Business is undergoing a transformation from the industrial to the information age. Information technology (IT) opens up possibilities for new business solutions; it offers exceptional opportunities for fast innovators and harbors fundamental risks for laggards.
Hubert Österle

3. Business Networking: A Process-oriented Framework

The company CONMAT1, a wholesaler in the building sector, has optimized its internal business processes over the course of the past few years. What was once a fully integrated company was then split into five customer-based or product-based business areas. Today, each business area implements its own goals in separately managed procurement and sales processes. The finance and logistics processes for all the business areas are handled jointly by the CONMAT Service Company at a shared service center. Based on the figures relating to the period prior to the reorganization, procurement, sales and logistics now operate considerably more effectively and efficiently than before.
Elgar Fleisch, Hubert Österle

Business Concepts


4. Strategies for Business Networking

As the networking scenarios in Chapter 3 revealed, Business Networking provides a strategic concept enabling new and/or more efficient processes to be introduced by extending the application of IT to relationships a company has with its partners. A broad variety of strategies are under discussion, such as outsourcing, virtual organizing, electronic commerce or supply chain management. Apart from clarifying the value added of each conceptual approach, differentiation of strategies helps in deciding how strategic goals, such as strengthening an existing market position, can be achieved.
Rainer Alt, Thomas Puschmann, Christian Reichmayr

5. Business Networking Lessons Learned: Supply Chain Management at Riverwood International

In 1996 the management of Riverwood International (RWI), an integrated paperboard and packaging supplier with head quarters in Atlanta, GA, USA, set out to create a new level of customer service within the industry. RWI wanted to enhance its competitive position by improving the flow of information to and from the customer. This information flow will be determined by the uniqueness of the commercial relationships between each customer, and in some cases each ‘ship to’ location of each customer. RWI has developed capabilities that enable small customers to process orders, inquire into order status, and monitor global inventory position with direct access to RWI’s information system via an Internet based solution. In the case of large customers, RWI is implementing new global materials management strategies, negotiated delivery and production schedules and shared sales and purchasing forecasts. Implementing these strategies, RWI and their customers will realize the benefits in the areas of inventory reductions, lower process costs, and greater flexibility for retail market response.1
Elgar Fleisch, Hubert Österle, Robert Betts

6. Electronic Commerce and Supply Chain Management at ‘The Swatch Group’

Electronic commerce (EC) and supply chain management (SCM) are two Business Networking strategies that are enjoying widespread popularity. Both are concepts designed to sustain networking among businesses and as such are attracting considerable management attention these days. This is explained by the substantial growth in electronic sales that is expected to take place in the coming years. According to [Forrester 1998] five percent of all global sales will be through electronic media by 2003. While EC is often put on a level with such sales solutions as electronic catalogs, malls and auctions, all sales involve supply chain activities as well. The latter cover the entire production process from procurement to distribution and for some products at least have reached a remarkable degree of sophistication. Examples are immaterial products (e.g. news, and software) as well as some physical products, such as CDs, books or computers. Compared to the potential of physical products, electronic sales are still negligible. Prominent exceptions, such as Dell or Cisco, have had a measure of success due to their efficient link to EC and supply chain solutions. But for many companies this still remains an intricate task. This is because the solutions for EC and SCM have evolved from different backgrounds: The former from sales and marketing and the latter from physical logistics, production and materials management.
Rainer Alt, Karl Maria Grünauer, Christian Reichmayr, Rudolf Zurmühlen

7. Knowledge Enabled Customer Relationship Management

The redesign of business processes and the implementation of standard software for enterprise resource planning (ERP) in recent years has led to significant improvements in both process performance and service quality (cf. Chap. 2.3.1). Now that the classic reengineering trend is slowing down, companies have come to realize that efficiency in itself is no longer sufficient if they are to compete for customers in the 21st century. In many markets we are currently witnessing a major move away from market and product centricity towards a complete realignment of business processes in order to integrate with customer processes, which creates additional customer values and finally leads to lasting customer relations. The efforts directed at building and maintaining long-term relationships with customers are usually summarized as ‘customer relationship management (CRM)’. CRM represents one of the networking strategies in Business Networking (cf. Chap. 4.3.3) and is driven by both business and technology:
Jens Schulze, Frédéric Thiesse, Volker Bach, Hubert Österle

Information System Concepts


8. Future Application Architecture for the Pharmaceutical Industry

As described in Chapter 2 profound changes are taking place in the way business is being done in the information age. An excellent example is provided by Cisco, the leading supplier of Internet-equipment, such as routers, switches and the like. Sales amounting to some USD 8 billion, highlight that only few companies have better understood the far-reaching management consequences of new technologies than Cisco. The company has been in the front line whenever it came to transforming management practices through the use of the new technologies. Cisco is thoroughly organized as a network. Existing and prospective customers, suppliers, other business partners and employees are tightly interlinked. This year, Cisco expects to sell products for more than USD 5 billion (more than half of its total sales) via the Internet. Cisco’s Business Networking solution links the systems of suppliers, contract manufacturers and assemblers to Cisco’s production processes. To the outside world, i.e. to customers, Cisco appears as a single enterprise. Through the Cisco Intranet, the contract partners directly process the orders placed by Cisco’s customers and deliver the selection of items ordered directly to the buyer, frequently without Cisco seeing the items at all. Outsourcing of 70% of production has enabled Cisco to boost its sales four times without the need for additional facilities and, on top of this, Cisco has succeeded in shortening the time to market for new products by two thirds.
Thomas Huber, Rainer Alt, Vladimir Barak, Hubert Österle

9. Information Systems for Supply Chain Management: An Overview

For decades industry has been working on the challenge of synchronizing customer needs with the resources of a supply chain and optimizing the objectives of the business units involved, such as return on assets (ROA), against the background of service level, assets and supply chain costs.
Karl Maria Grünauer, Elgar Fleisch, Hubert Österle

10. Electronic Commerce in the Procurement of Indirect Goods

This article looks at the latest, innovative class of Business Networking applications, referred to as desktop purchasing systems (DPSs). In recent years the face of many businesses has been changed radically by business process redesign and/or through the introduction of integrated standard software, referred to as ERP systems (cf. Chap. 2.3.1), e.g. SAP R/3, Oracle Applications or Baan IV. BPR projects essentially deal with the interface to external customers and rarely encompass the organization’s procurement function.
Ralph Dolmetsch, Elgar Fleisch, Hubert Österle

11. Templates: Achieving Standardization for Business Networking

Business in the information age depends to a large extend on the availability of accepted standards (see, for example, [OECD 1996]. They significantly reduce the coordination requirements between business partners and are the basis for establishing integrated information flows. The availability of Internet standards, such as HTML or TCP/IP, has been a main enabler in the evolution of electronic commerce (EC) since the early 1990s. In providing specifications for the interconnectivity of information systems, which stretch across system platforms and user communities, they allowed the integration of heterogeneous sectors within an economy. Generally, we can distinguish two main thrusts towards standardization: business requirements and technological integration [cf. Venkatraman 1991].
Thomas Huber, Rainer Alt, Günter Lehmann

Key Success Factors


12. Key Success Factors for Transaction-oriented Business Networking Systems

Relationships among business units have recently been gaining momentum in a broad variety of industries. Previous chapters have shown that Business Networking leads to process efficiency, such as reduced cycle times, reduced process costs, increased customer service, and new distribution channels (cf. Chaps. 5 and 6). The current figures for business-to-business EC, which forecast a growth from USD 43 billion in 1998 to USD 1,300 billion in 2003 [cf. Forrester 1998] witness to these strategic developments. In view of the major relevant management trends (cf. Chaps. 2 and 8) establishing networkability (cf. Chap. 1) is one of the most important determinants of a company’s future competitiveness.
Rainer Alt, Elgar Fleisch

13. Towards a Method for Business Networking

Translating the key success factors developed in Chapter 12 into implemented processes and applications represents a major challenge. In order to reach Business Networking goals, such as improved customer care or reduced inventories, business partners have to be convinced, business processes among the partners have to be agreed upon, and the strategic and process scenario has to be translated into enabling IT applications. Some of the specific questions which arose in the various cases discussed in previous chapters are:
  • What is a proven sequence for proceeding in a Business Networking project? What are the major steps and what are suitable techniques for ensuring quick and successful implementation?
  • How is networkability assessed and which networking scenario (cf. Chap. 3.3) meets our strategic goals? What is the return on investment of this solution?
  • Are partners needed for the realization of the solution? How is the participation of future users ensured and how are partner relationships organized?
  • What tools are chosen and how can they be integrated into existing system landscapes? What are the implications of the networking solution for the overall application and service architecture?
Roland Klüber, Karl Maria Grünauer, Rainer Alt, Robert Betts, Karl-Heinz Schelhas

14. Shaping Business Process Networks at ETA SA

Today, value networks of business units, such as group companies, profit centers or independent companies with different, complementary core competencies, come in many shapes and sizes. The aim of such networks is to provide their customers with products and services with a high level of customer benefits. For this purpose, the partners involved harmonize their business processes, supply chain infrastructures and information systems and coordinate parts of their operative activities at the interorganizational level.
Roger Benz, Elgar Fleisch, Karl Maria Grünauer, Hubert Österle, Rudolf Zurmühlen

15. Shaping Applications for Global Networked Enterprises

An international chemicals group decides to introduce the packaged software SAPR/3 throughout the organization. This decision will affect eight divisions, 200 legally independent companies and some 150 different countries. Initial implementations were based on individual companies within the group. However, an investigation of the global supply chain revealed a lack of consistency in core processes. This investigation made it clear that future implementations will have to be coordinated throughout the group. The first question to be clarified is the significance which the legal entities, divisions and regions are to have for the group in the future and the dependencies which will result. The integration requirements can then be derived from this analysis of the business relationships involved.
Sven Pohland, Elgar Fleisch

16. Business Networking — Summary and Outlook

This book has described Business Networking as one of the seven trends companies have to address in order to remain competitive (cf. Chap. 2.3). Its relevance is growing and companies failing to develop strategies for Business Networking will either miss out on opportunities or suffer from pursuing their partner relationships on an erratic basis. Throughout this book the need for networkability has been stressed considering the impetus it is bound to give to the cooperation with business partners. Networkability reduces the time and cost of establishing partner relationships as well as the specificity of the investments undertaken. The cases studied brought out the two main areas which Business Networking strategies are apt to support:
  • Improved efficiency of interorganizational workflows. Links to suppliers and customers have to be supported by every company. They are increasingly global in nature. Business Networking is an efficient strategy to interface with partners and to streamline existing business processes. For example, introducing the electronic commerce solution at ETA (cf. Chap. 6) led to significant efficiencies in order processing and improvements in customer service.
  • New business opportunities. Business Networking can sustain companies in developing new market segments. Shaping new business models generates opportunities and the Internet provides a constant flow of new examples of companies that succeeded in outmaneuvering established players thanks to innovative business concepts. Prominent examples, such as, Dell or, were mentioned in Chapter 3. An example described in more detail was the supply chain integration centers that Riverwood is planning to develop from their VMI-solution (cf. Chap. 5.7).
Rainer Alt, Elgar Fleisch, Hubert Österle


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